San Francisco-based retail giant Gap announced that 500 employees, or approximately 5% of their corporate employees are to be laid off in San Francisco as well as in smaller numbers in New York, marking the latest mass layoff to affect the Bay Area this year.
The Bay Area has seen a large amount of turmoil in the job market in only the last few months. Numerous factories and distribution centers have closed down, and even well performing tech companies such as Tesla have laid off hundreds. But, with continued supply chain problems, high costs still being a factor in San Francisco, a global recession, and a decline in sales due to shoppers going for different brands, Gap joined the list of Bay Area employers who had to massively cut their workforce this year.
The company, which also owns brands Old Navy, Banana Republic, and Athleta, has been struggling since the pandemic. In August 2020, months after the pandemic hit, Gap closed their flagship store on Market Street in the city. Some brand agreements, such as with Kanye West’s Yeezy brand, have fallen through. And in July, their CEO of two-and-a-half years, Sonia Syngal, left following poor performance in revitalizing the company.
Gap layoffs only the latest mass layoff event in the Bay Area this year
While some of the 500 job losses will be in New York and Asia, most of them will come at the corporate level in San Francisco. Job experts told the Globe on Wednesday that while recession fears have sparked many of the mass layoffs, companies either being based or located in the Bay Area have many unique challenges and have been failing more often than not at meeting them in recent years.
“San Francisco, as well as the whole Bay Area, really saw a resurgence after the Great Recession of the late 2000’s,” explained Julie Ochs, a San Jose-based headhunter and hiring specialist, to the Globe. “And San Francisco is weird. They follow economic trends heavily when it comes to the economy, but because of how the hiring of the city is, tech trends factor more. So the cities fortunes are amplified. When the Country is doing good, San Francisco is doing really good. When the country is doing not so great, it’s even worse here.”
“And we’ve seen it before, with the dotcom bubble and the Great Recession in recent decades. But COVID-19, and this oncoming recession, have have been a one-two hit. The pandemic closed many stores and amplified housing prices so much that people largely stopped buying. Many people went remote or left the area, and even after work resumed and COVID restrictions were lifted, downtown San Francisco was left with so many vacancies that some buildings are half empty. Supply chain issues are still doing their toll too, which isn’t great for tech companies reliant on that. And now with many people not spending as much, in particular families who are avoiding shopping, it’s a problem. So these Gap layoffs really make sense with the bigger picture. Oh, and that’s on top of other brands taking over their market and failing to get a large online presence early on.”
“Gap is sadly yet another company hit hard by a lot of differing factors in 2022. It’s not like some companies being forced out due to crime concerns in the city, but it’s another sign of the times here in San Francisco. And they won’t be the last here this year in all likelihood.”
Other tech companies based in the city are likely to announce similar reduction plans later this year.
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